Most credit portfolio managers believe credit defaults will rise in the coming months, although the level of pessimism is waning, according to the fourth-quarter survey from the International Association of Credit Portfolio Managers.
The majority of surveyed credit managers, 61%, forecast rising loan defaults over the next 12 months globally, although that is down from 73% of managers that responded with that answer in the third quarter.
By region, 74% see defaults rising in Europe (down from 81%), 63% in North America (down from 75%), 48% in Asia (down from 56%), and 31% in Australia (down from 65%).
The Aggregate Credit Default Outlook index for the next 12 months rose to -64.2 in the most recent survey, improving from -74.5 in the previous quarter. A negative number indicates credit conditions are expected to worsen, while positive numbers mean conditions are expected to improve.
Som-lok Leung, IACPM's executive director, said in a telephone interview that while the forecast remains negative, there's a growing sense the situation will improve with the roll out of the COVID-19 vaccines.